Paper 1: Financial Accounting
Section A (Multiple Choice Questions)
1. Which of the following is not an element of financial statements?
a) Assets
b) Liabilities
c) Owners' equity
d) Revenue
2. The basic accounting equation is:
a) Assets = Liabilities + Owner's equity
b) Assets - Liabilities = Owner's equity
c) Assets + Liabilities = Owner's equity
d) Liabilities + Owner's equity = Assets
3. Which of the following statements is false?
a) Debit balances are shown on the left side of the balance sheet.
b) Credit balances are shown on the right side of the balance sheet.
c) Assets accounts have debit balances.
d) Liability accounts have credit balances.
4. The process of recording financial transactions in the accounting books is called:
a) Journalizing
b) Posting
c) Balancing
d) Closing
5. Which of the following accounts is not a temporary account?
a) Sales
b) Purchases
c) Cash
d) Accumulated depreciation
Section B (Short Answer Questions)
6. Explain the concept of duality in accounting.
7. List and briefly explain the three main types of financial statements.
8. What is the purpose of a trial balance?
9. What is the difference between a debit and a credit?
10. Name and briefly explain the three main adjusting entries.
Section C (Long Answer Questions)
11. Prepare the journal entries to record the following transactions:
a) Purchased a laptop for office use for Rs. 50,000.
b) Sold goods to a customer on credit for Rs. 1,00,000.
c) Received rent for the month from a tenant for Rs. 20,000.
d) Paid salaries to employees for the month for Rs. 50,000.
e) Received cash from a customer in full settlement of their outstanding account balance of Rs. 25,000.
12. Prepare a trial balance as on 31st March 2023 from the following balances:
Cash: Rs. 50,000
Accounts Receivable: Rs. 1,00,000
Inventory: Rs. 75,000
Prepaid Expenses: Rs. 10,000
Land: Rs. 2,00,000
Building: Rs. 3,00,000
Accounts Payable: Rs. 70,000
Unearned Revenue: Rs. 15,000
Long-Term Loan: Rs. 2,50,000
Share Capital: Rs. 4,00,000
Retained Earnings: Rs. 1,50,000
Paper 2: Cost Accounting
Section A (Multiple Choice Questions)
1. Cost accounting is the process of:
a) Collecting, classifying, and analyzing cost data.
b) Determining the cost of a product or service.
c) Setting prices for products or services. d) Evaluating the efficiency of a business.
2. The three main types of costs are:
a) Direct materials, direct labour, and indirect costs
b) Variable costs, fixed costs, and semi-variable costs
c) Product costs, period costs, and selling costs
d) Prime costs, conversion costs, and administrative costs
3. Direct materials are:
a) Materials that are directly used in the production of a product.
b) Materials that are used in the day-to-day running of a business.
c) Materials that are used in the production of more than one product.
d) Materials that are used in the production of a product but are not easily traced to that product.
4. Direct labour is:
a) Labour that is directly involved in the production of a product.
b) Labour that is used in the day-to-day running of a business.
c) Labour that is used in the production of more than one product.
d) Labour that is used in the production of a product but is not easily traced to that product.
5. Indirect costs are:
a) Costs that are not directly related to the production of a product.
b) Costs that are directly related to the production of a product.
c) Costs that are used in the day-to-day running of a business.
d) Costs that are used in the production of more than one product.
Section B (Short Answer Questions)
6. Explain the purpose of cost accounting
7. List and briefly explain the three main types of costs.
8. What are the different methods of costing?
9. What is the difference between job costing and process costing?
10. Explain the concept of standard costing.
Section C (Long Answer Questions)
11. Calculate the total cost of production for a product that requires the following direct materials and direct labour:
Direct Materials:
Material A: 10 units at Rs 5 per unit
Material B: 20 units at Rs 8 per unit
Material C: 30 units at Rs 12 per unit
Direct Labour:
Labour A: 5 hours at Rs 15 per hour
Labour B: 8 hours at Rs 20 per hour
Labour C: 12 hours at Rs 25 per hour
Overheads are applied at a rate of 20% of direct labour cost.
12. Prepare a job costing sheet for a job that requires the following materials and labour:
Materials used:
Material A: 200 units
Material B: 100 units
Material C: 150 units
* Material Purchase Price
a. Rs. 50 per unit
b. Rs 120 per unit
c. Rs. 80 per unit
Labour hours used:
Labour A: 25 hours
Labour B: 15 hours
Labour C: 20 hours
*Labour Rate
a. Rs. 25 per hour
b. Rs. 30 per hour
c. Rs. 40 per hour*
Overhead is applied at a rate of 150% of direct labour cost.